• intellectual property rights (IPR);
  • informal institutions;
  • religion;
  • enforcement

This study examines the stance of Islamic legal traditions (Shari'a) towards intellectual property (IP) piracy. Although Muslims may differ on what Shari'a dictates, most of them view Shari'a as God's law and as a main ingredient of Islamic belief system. Since piracy rates in Islamic countries are considerably high in light of existing formal IPR laws, it becomes essential to test if Shari'a has any relation with such phenomenon. Our hypothesis is that, although Muslim countries have formal institutions or laws that protect intellectual property rights (IPR), little attention is given to informal institutions, or human morals, regarding IPR piracy, which negatively affects the enforcement level of IPR laws in these countries. Muslims may not be convinced that IPR violations, although illegal, are unethical or forbidden by Islamic Shari'a. In order to test the level of adherence of Muslims to Shari'a to support our hypothesis, we develop a “religious loyalty” index (RLI). Comparing adherence of followers of different religions with those of Islam, Muslim countries have the highest religiosity level, positively affecting obedience level to Shari'a. Consequently, an investigation of how Shari'a views IPR piracy is conducted. As Islam generally prohibits IPR piracy, the study concludes by offering a set of policy recommendations that can effectively help in minimizing IPR piracy in Muslim countries.